Tuesday, 16 October 2012

Ron Paul: Real Unemployment Is at 22.8%

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Last week, supporters of the current administration rejoiced over job
numbers released by the Bureau of Labor and Statistics (BLS). For the
first time since the administration came to power, the official
unemployment number fell below 8%. Keynesian cheerleaders all claimed
the numbers meant we are surely on the road to economic recovery, just
in time for Christmas, and also, the election. Others saw through this ruse.

The situation on the ground looks nothing like a recovery. 23 million
people are still out of work or chronically underemployed. This number
is expected to rise dramatically next year. The situation in Washington
should not give anyone cause for optimism. Politicians refuse to look
honestly and intelligently at the cause of our economic malaise, and so
real solutions are not taken seriously or acted upon. It is much easier
and less painful to simply recalculate the numbers and redefine the
terms until a rosier picture is presented. There is only blind hope that
at some point, for some reason, things might change. But nothing will
change for the better if we only stay the course.

The truth is the long term solutions to our economic quagmire involve
some short term pain. Re-evaluating the economic role of an institution
as insidious and behemoth as the Federal Reserve
will inconvenience some people, and those people happen to have a lot
of power. Similarly, the idea of ending government programs and closing
down superfluous departments will always upset someone because it means
someone will stop getting a government check.

No one wants to upset the apple cart, even if all the apples are rotten.

Not all of the unemployed are counted in the BLS unemployment
numbers. This is no secret. In 1994 government statisticians came up
with the term “discouraged worker” to remove entire swaths of people
from the unemployment statistic. Now all the government has to do to
improve the unemployment numbers is discourage people from looking for a
job.

Far more unintended consequences are created in Washington than jobs.

Ideally, the business sector should be able to depend on sound
numbers from the BLS, but smart business leaders know that trust in
these numbers leads to bad decisions and failure. In regards to the
recent jobs numbers, investor Jim Rogers recently stated “I have learned
not to take advice from the government, especially the US government,
which frequently misleads its citizens.” He also noted the election just
around the corner, suggesting timing as an extra incentive to keep
fudging the statistics.

The real drivers of the productive economy can’t afford to take risks
based on false numbers. This is why economist John Williams created
Shadow Government Statistics, utilizing more traditional methodologies
and definitions to show business decision makers the real economic
picture, warts and all. He shows the real unemployment rate to be a
staggering 22.8%.

This is a difficult figure to accept as the actual truth. Perhaps if
the politicians did, the people would finally demand real change and
real solutions. Perhaps they would consider that all of the so-called
stimulus spending, quantitative easing and mountains of regulation from
Washington has only crippled the economy. Perhaps people would come to
understand that fewer checks handed out from the public sector would
mean more checks available in the private sector, and a return to real
prosperity instead of just the appearance of it.